Predicting the future
No one can accurately predict the future. That requires knowing all the possible variables in an equation so big – it will serve us no real purpose to even discuss it here. Therefore, whether we are talking about tomorrow’s weather or what the world economy will be like in another 10 years – there is always a degree of uncertainty that we associate with the future. Predicting the trends of the stock market or the real estate market is something that experts do but still, there is no way to actually know the future until it becomes the present with time. Interestingly, we can look to our past and find some interesting tell-tale patterns that can give us a better understanding of how things are working with time. With all this in mind, let us go ahead and discuss some factors, which can and possibly will affect the future of the real estate market.
Factor 1: The simple supply and demand chain
The concept of supply and demand is very fundamental to the modern world’s capitalistic approach to the economy. In our case, if in the future there are more houses for sale in the real estate market – more houses than there are buyers for them – then the real estate prices will fall. This is because there is more supply than demand. It is quite an easy concept to understand now, isn’t it? The opposite of this holds true as well – if there are more buyers than there are houses on sale – then the real estate prices will rise because this time there is more demand than there is supply. As you can tell, this simple concept of supply and demand can keep the real estate market fluctuating with time.
Factor 2: The banks
Banks are the ones that lend people money when they need to buy homes. But, a lot of it depends upon their policies. These policies change depending upon the situation of any particular bank in the economy. So, for example, if both the bank and the economy are doing good – home loans are given out easier. More home loans mean more buyers on the market and this can lead us back to our first point about supply and demand. Now, you can see how institutions like banks can also affect the real estate market in some indirect ways.
Factor 3: Job security and general optimism (or lack thereof) in future generations
The more financially secure a person is – the more they are likely to buy a house. It really does not get any simpler than that. So, if the future brings with it better job security for people in general – then people might be more inclined to buy houses as compared to if it were the opposite.